Pre-Feasibility Study

BAKERY AND CONFECTIONERY

Small and Medium Enterprises Development Authority

Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
helpdesk@smeda.org.pk

REGIONAL REGIONAL REGIONAL REGIONAL

OFFICE OFFICE OFFICE OFFICE
PUNJAB SINDH KPK BALOCHISTAN

3rd Floor, Building No. 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
3, Aiwan-e-Iqbal Complex II, M.T. Khan State Life Building Chaman Housing
Complex, Egerton Road Road, The Mall, Peshawar. Scheme
Lahore, Tel: (042) 111- Karachi. Tel: (091) 9213046- Airport Road,
111-456 Tel: (021) 111-111-456 47 Quetta. Tel: (081)
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 831623, 831702
helpdesk.punjab@smeda.org.pk helpdesk- helpdesk- Fax: (081) 831922
khi@smeda.org.pk pew@smeda.org.pk helpdesk-
qta@smeda.org.pk
February 2015
Pre-Feasibility Study Bakery and Confectionary

TABLE OF CONTENTS
1 DISCLAIMER......................................................................................................................................................... 3
2 EXECUTIVE SUMMARY..................................................................................................................................... 4
3 INTRODUCTION TO SMEDA........................................................................................................................... 4
4 PURPOSE OF THE DOCUMENT..................................................................................................................... 4
5 BRIEF DESCRIPTION OF PROJECT & PRODUCT....................................................................................5
5.1 Installed and Operational Capacities...................................................................5
6 CRITICAL FACTORS........................................................................................................................................... 5
7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT................................................................................. 6
8 POTENTIAL TARGET CUSTOMERS / MARKETS....................................................................................6
9 PROJECT COST SUMMARY.............................................................................................................................. 6
9.1 Project Economics..............................................................................................6
9.2 Project Financing................................................................................................7
9.3 Project Cost........................................................................................................ 7
9.4 Space Requirement............................................................................................8
9.5 Machinery & Equipment Requirement.................................................................8
9.6 Furniture & Fixtures Requirement.......................................................................9
9.7 Office Equipment Requirement...........................................................................9
9.8 Human Resource Requirement.........................................................................10
9.9 Utilities and other costs.....................................................................................10
9.10 Revenue Generation.........................................................................................11
10 CONTACT DETAILS......................................................................................................................................... 12
10.1 Technical Experts / Consultants........................................................................12
10.2 Suppliers........................................................................................................... 12
11 USEFUL WEB LINKS........................................................................................................................................ 13
12 ANNEXURES....................................................................................................................................................... 14
12.1 Income Statement.............................................................................................14
12.2 Balance Sheet...................................................................................................15
12.3 Cash Flow Statement........................................................................................16
13 KEY ASSUMPTIONS......................................................................................................................................... 17
13.1 Operating Cost Assumptions............................................................................17
13.2 Revenue Assumptions......................................................................................17
13.3 Financial Assumptions......................................................................................17
13.4 Raw Material Assumptions................................................................................18

February 2015 2
1 DISCLAIMER

This information memorandum is to introduce the subject matter and provide a

general idea and information on the said matter. Although, the material included in
this document is based on data/information gathered from various reliable
sources; however, it is based upon certain assumptions, which may differ from
case to case. The information has been provided on as is where is basis without
any warranties or assertions as to the correctness or soundness thereof. Although,
due care and diligence has been taken to compile this document, the contained
information may vary due to any change in any of the concerned factors, and the
actual results may differ substantially from the presented information. SMEDA, its
employees or agents do not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. The
contained information does not preclude any further professional advice. The
prospective user of this memorandum is encouraged to carry out additional
diligence and gather any information which is necessary for making an informed
decision, including taking professional advice from a qualified consultant/technical
expert before taking any decision to act upon the information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk

DOCUMENT CONTROL

Document No. PREF-NO. 77

Revision No. 4
Prepared by SMEDA-Punjab
Revision Date February 2015
For information janjua@smeda.org.pk
2 EXECUTIVE SUMMARY

Bakery and Confectionery business is growing in both urban and semi-urban

areas. This pre-feasibility study encompasses the bakery business located in a
commercial neighborhood surrounding and middle income residential localities.
Major products include cakes, snacks, sweets, nimko, biscuits, bread and general
confectionery items, which will be sold to target customers of the vicinity. The
sales outlet will be supported by an in house production facility. Selections of
adequate product mix and business location, supported by marketing efforts are
the critical success factors.
The proposed Bakery & Confectionery business will be started as sole
proprietorship with an investment of Rs. 3.98 million. This project is based on 50%
debt and 50% equity ratio. Projected NPV, IRR and Payback of this project are Rs.
8.31 million, 53% and 2.61 years, respectively. The business will provide
employment opportunity to 12 individuals including the Owner Manager.

3 INTRODUCTION TO SMEDA

The Small and Medium Enterprises Development Authority (SMEDA) was

established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase the
number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectoral
research’ to identify policy, access to finance, business development services,
strategic initiatives and institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a successful hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business
development services is also offered to the SMEs by SMEDA. These services
include identification of experts and consultants and delivery of need based
capacity building programs of different types in addition to business guidance
through help desk services.

4 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential

entrepreneurs in project identification for investment. The project pre-feasibility
may form the basis of an important investment decision and in order to serve
this
objective, the document/study covers various aspects of project concept
development, start-up, and production, marketing, finance and business
management.
The purpose of this document is to facilitate potential investors in Bakery &
Confectionary business by providing them with a general understanding of the
business with the intention of supporting potential investors in crucial investment
decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes
such reports reveal certain thumb rules; best practices developed by existing
enterprises by trial and error, and certain industrial norms that become a guiding
source regarding various aspects of business set-up and it’s successful
management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form basis of any investment decision.

5 BRIEF DESCRIPTION OF PROJECT & PRODUCT

The proposed Bakery and Confectionery shop is a small scale project with a
production area and sales out-let. It will be equipped with basic machinery and
fixtures. The production area will require covered area of 5,000 sq.ft. and the outlet
will be established on 750 sq.ft. The sales outlet will remain open for business for
16 hours per day around the year.
Product mix will include cakes, snacks, sweets, nimko, biscuits, bread and general
confectionery items. This merchandise will be prepared and acquired according to
the demand of local customers and in quantities directly proportional to expected
sales.
Maximum sales are expected during Eid seasons and in winters. First year
revenues of the project are estimated to be Rs 18.35 million. It is expected that
production growth rate will be 5% per annum along with 10% per annum increase
in sales price.

5.1 Installed and Operational Capacities

The installed capacity of bakery depends on the variety of the products being
produced. Starting capacity utilization is 70% with growth rate of 5% per annum.

6 CRITICAL FACTORS

Following are the factors critical for the success of this business venture;
  Background knowledge and experience of the entrepreneur in the bakery
business.
 Induction of trained human resource for production of requisite items.
 Maintenance of quality and hygiene standards.
 Pricing strategy & understanding requirements of the target customers.
 Decor presentation and layout of the shop and products.
 Location considerations for easy access of the customers.

7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Smaller cities with growing middle income group such as Sargodha, Sheikhupura,
Gujarat, Sukkur, Hyderabad, Noshehra, Charsada, Quetta, Khuzdar and Gilgit are
some of the prospective cities for setting up this business. Areas of Lahore with
more concentration of middle income class are also favorable for this project.

8 POTENTIAL TARGET CUSTOMERS / MARKETS

Areas having presence of middle income groups in the above stated cities will be
an ideal location for opening sales outlet of the business. Ideally, production facility
of the workshop should be located alongside the sales outlet; however, if the rental
costs are a constraint, production facility can be established at a distant
economical location. In such a case, higher transportation costs may need to be
factored in.

9 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability
of Bakery and Confectionery business. Various cost and revenue related
assumptions along with results of the analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as annexure.

9.1 Project Economics

All the figures in this financial model have been calculated for estimated sales of Rs.
18.35 million in the year one. The capacity utilization during year one is worked out
at 70% with 5% increase in subsequent year’s up to the maximum capacity
utilization of 95%.
The following table shows internal rate of return, payback period and net present
value of the proposed venture:
 Table 1: Project Economics

Description Details
Internal Rate of Return (IRR) 53%
Payback Period (years) 2.61
Net Present Value (NPV) Rs. 8,313,285
Project returns are based on the margins of the items sold. Profitability of the
business is highly dependent on raw material cost. Moreover, in bakery or food
item businesses the probability of wastage is higher, hence the reduction of
wastage through demand and supply analysis will play a vital role in profit
maximization. In this regard, efficient supply chain management will be an
appropriate strategy for this venture.
Another crucial factor for the success of this project is to maintain the hygienic
standards and clean environment to avoid customer complaints.

9.2 Project Financing

Following table provides details of the equity required and variables related to
bank loan:

Table 2: Project Financing

Description Details
Total Equity (50%) Rs. 1,990,688
Bank Loan (50%) Rs. 1,990,688
Markup to the Borrower (%age / annum) 15%
Tenure of the Loan (Years) 5

9.3 Project Cost

Following fixed and working capital requirements have been identified for
operations of the proposed business:

Table 3: Project Cost

Description Amount Rs.

Capital Investment
Machinery & Equipment 1,294,400
Furniture & Fixtures 440,000
 Office Vehicles 861,000
Office Equipment 141,500
Pre-operating Costs 180,000
Training Costs 10,000
Total Capital Costs 2,926,900
Working Capital
Raw Material Inventory 329,475
Upfront Building Rent 225,000
Cash 500,000
Total Working Capital 1,054,475
Total Investment 3,981,375

9.4 Space Requirement

The space requirement for the proposed Bakery and Confectionary Unit mainly
includes the production hall, store room and a retail outlet. For this purpose, it is
recommended that a rental place of maximum 5,750 sq.ft. (i.e. 5,000 sq.ft. for
production space and 750 sq.ft. for outlet) would be acquired. The production
space and bakery outlet could be acquired at separate places. However, it should
be ensured that both the facilities are located closely for easy supply of produced
goods to the outlet.

Table 4: Space Requirment

Estimated Area Total Rent

Description
(Sq.ft.) (Rs.)
Production Unit 5,000 30,000
Outlet Space 750 45,000
Total Rent 5,750 75,000

9.5 Machinery & Equipment Requirement

Plant, machinery and equipment for the proposed project are stated below:

Table 5: Machinery & Equipment Requirment

No. Description No. of Item Cost per Item Original Value

1 Flour Sifter 1 250,000 250,000
3 Mixer Cakes and Cream Type 1 250,000 250,000
4 Oven (8x8 ft) 1 400,000 400,000
 5 Dyes 30 80 2,400
6 Deep Freezers 2 35,000 70,000
7 Frier and Burner 4 6,000 24,000
8 Ceiling Machine 1 3,000 3,000
9 Moving Trollies 7 5,000 35,000
10 UPS and Batteries 5 30,000 150,000
11 Trays 50 200 10,000
Misce Tools & Equipments
12 1 100,000 100,000
(Pans, Knieves and others)
1,294,400

The required machinery is easily available in the local markets. Used and new
machinery can be purchased from different whole sale markets including Lahore,
Karachi, Peshawar, Gujranwala, etc.

9.6 Furniture & Fixtures Requirement

In addition to the above plant machinery and equipment, following necessary items
will be required for the proposed venture:

Table 6: Furniture & Fixture Requirment

No. of Cost per Original

Sr. Description Item Item Value
1 Tables for Production 2 5,000 10,000
2 Chairs & Other Furniture 1 20,000 20,000
Cost of Renovation and Interior
3 Designing 1 200,000 200,000
4 Air Conditioner 1 60,000 60,000
5 Freezers 1 40,000 40,000
Weighing Scales (For Cash Counter
6 2 5,000 10,000
& Production)
7 Micro Wave Oven 2 15,000 30,000
8 Sign Board 1 20,000 20,000
9 Miscellaneous 1 50,000 50,000
440,000

9.7 Office Equipment Requirement

Following office equipment will be required for the proposed bakery and
confectionery shop:
 Table 7: Office Equipment Requirment

Unit Cost Total Cost

Description Quantity
(Rs.) (Rs.)
Computer with servers 1 125,000 125,000
Billing Machine 1 15,000 15,000
Telephone set 1 1,500 1,500
Total 141,500

9.8 Human Resource Requirement

Details of human resource required to run the operations of the proposed business
are as under:

Table 8: Human Resource Requirment

Description No. of Employees Monthly Salary

per Person (Rs.)
Owner Manager 1 25,000
Master Chef 2 20,000
Salesmen 3 12,000
Helpers 5 12,000
Driver 1 12,000

Above HR composition shall be engaged in order to manage the operational

affairs of this project under the supervision of the Owner Manager. Appropriate
experience for chef and salesmen would be required.

9.9 Utilities and other costs

An essential cost to be borne by the company is the cost of electricity and gas.
The electricity expenses are estimated to be around Rs. 50,000 per month (both
factory & outlet), whereas, gas expenses are estimated to be Rs. 345,139 / year
(including both natural gas and LPG at 70% capacity utilization). Considering the
non- availability or low pressure of natural gas alternate burning fuels i.e. LPG,
wood or kerosene oil may need to be considered. Advance procurement of raw
materials and packing material for at least 10 days along with 05 days finished
goods stock level will be maintained for uninterrupted sales of goods, at the
production and outlet facility.
9.10 Revenue Generation

Following table provides the details of sales revenues for year one:

Table 9: Revenue Generation – Year 1

Product Mix 1st Year Sales Revenue (Rs.)

Bakery Sales (70%) 14,113,575
General Item Sales (30%) 4,234,072
Total Sales 18,347,647
10 CONTACT DETAILS

In order to facilitate potential investors, contact details of private sector Service

Providers relevant to the proposed project be given.

10.1 Technical Experts / Consultants

Name of Expert /
Address Phone Fax
Organization
National Institute of Food 041-9200161- 041-
Prof. Dr. Salim Ur Science and Technology, 70/3011 9201439
Rehman University of Agriculture, 0300-6681047
Faisalabad
Food and Biotechnology 042-
Principal Scientific Research Centre 99230688-95
Officer PCSIR Labs, Ferozpur
Road, Lahore

10.2 Suppliers

Name of Expert /
Address Phone Fax
Organization

Bakexcel Associate Karachi

Saeed Fabrication
Lahore
Works
11 USEFUL WEB LINKS
Small & Medium Enterprises Development Authority
www.smeda.org.pk
(SMEDA)
Government of Pakistan www.pakistan.gov.pk
Ministry of Industries & Production www.moip.gov.pk
Ministry of Education, Training & Standards in
http://moptt.gov.pk
Higher Education
Government of Punjab www.punjab.gov.pk
Government of Sindh www.sindh.gov.pk
Government of Khyber Pakhtunkhwa www.khyberpakhtunkhwa.gov.pk
Government of Balochistan www.balochistan.gov.pk
Government of Gilgit Baltistan www.gilgitbaltistan.gov.pk
Government of Azad Jamu Kashmir www.ajk.gov.pk
Trade Development Authority of Pakistan (TDAP) www.tdap.gov.pk
Security & Commission of Pakistan (SECP) www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and
www.fpcci.com.pk
Industry (FPCCI)
State Bank of Pakistan (SBP) www.sbp.org.pk
Punjab Small Industries Corporation www.psic.gop.pk
Sindh Small Industries Corporation www.ssic.gos.pk
Punjab Vocational Training Council (PVTC) www.pvtc.gop.pk
Technical Education and Vocational Training
www.tevta.org
Authority (TEVTA)
Punjab Industrial Estates (PIE) www.pie.com.pk
Faisalabad Industrial Estate Development and
www.fiedmc.com.pk
Management Company (FIEDMC)
Ministry of National Food Security & Research www.mnfsr.gov.pk
Punjab Food Authority www.punjabfoodauthority.gov.pk
Pre-Feasibility Study Bakery and
Confectionary

12 ANNEXURES

12.1 Income Statement

Calculations SMEDA
Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 18,347,647 21,908,272 25,707,195 30,046,820 34,997,297 40,637,402 44,733,842 49,207,227 54,127,949 59,540,744
Cost of sales
Raw Material Cost 11,861,105 14,162,923 16,618,792 19,424,206 22,624,515 26,270,643 28,918,847 31,810,732 34,991,805 38,490,985
Operation costs 1 (direct labor) 2,366,667 2,637,556 2,901,479 3,191,790 3,511,129 3,862,399 4,251,746 4,676,921 5,144,613 5,659,074
Operating costs 3 (direct electricity) 240,000 264,000 290,400 319,440 351,384 386,522 425,175 467,692 514,461 565,907
Operating costs 4 (direct water) 24,850 29,673 34,818 40,695 47,400 55,039 60,587 66,646 73,311 80,642
Operating costs 5 (direct gas) 345,139 412,118 483,580 565,213 658,337 764,433 841,491 925,641 1,018,205 1,120,025
Total cost of sales 14,837,760 17,506,269 20,329,069 23,541,344 27,192,764 31,339,036 34,497,847 37,947,631 41,742,395 45,916,634
Gross Profit 3,509,887 4,402,003 5,378,126 6,505,475 7,804,533 9,298,366 10,235,996 11,259,595 12,385,555 13,624,110
General administration & selling expenses
Administration expense 876,000 963,600 1,059,960 1,165,956 1,282,552 1,410,807 1,551,887 1,707,076 1,877,784 2,065,562
Administration benefits expense 87,600 96,360 105,996 116,596 128,255 141,081 155,189 170,708 187,778 206,556
Building rental expense 900,000 990,000 1,089,000 1,197,900 1,317,690 1,449,459 1,594,405 1,753,845 1,929,230 2,122,153
Electricity expense Outlet 360,000 396,000 435,600 479,160 527,076 579,784 637,762 701,538 771,692 848,861
Gas expense
Travelling expense 91,738 109,541 128,536 150,234 174,986 203,187 223,669 246,036 270,640 297,704
Communications expense (phone, fax, mail, internet, etc.) 17,520 19,272 21,199 23,319 25,651 28,216 31,038 34,142 37,556 41,311
Office expenses (stationary, entertainment, janitorial services, etc.) 8,760 9,636 10,600 11,660 12,826 14,108 15,519 17,071 18,778 20,656
Promotional expense 183,476 219,083 257,072 300,468 349,973 406,374 447,338 492,072 541,279 595,407
Depreciation expense 287,840 287,840 287,840 287,840 287,840 305,117 305,117 305,117 305,117 305,117
Amortization of pre-operating costs 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000
Amortization of legal, licensing, and training costs 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Subtotal 2,831,935 3,110,332 3,414,803 3,752,133 4,125,849 4,557,133 4,980,925 5,446,605 5,958,854 6,522,328
Operating Income 677,952 1,291,671 1,963,323 2,753,343 3,678,684 4,741,233 5,255,071 5,812,990 6,426,701 7,101,782

Gain / (loss) on sale of office equipment - - - - 56,600 - - - -

Earnings Before Interest & Taxes 677,952 1,291,671 1,963,323 2,753,343 3,735,284 4,741,233 5,255,071 5,812,990 6,426,701 7,101,782

Interest expense on long term debt (Project Loan) 226,886 193,368 148,262 96,163 35,987 - - - - -
Interest expense on long term debt (Working Capital Loan) 81,740 69,665 53,414 34,645 12,965 - - - - -
Subtotal 308,627 263,033 201,676 130,808 48,952 - - - - -
Earnings Before Tax 369,325 1,028,638 1,761,647 2,622,535 3,686,332 4,741,233 5,255,071 5,812,990 6,426,701 7,101,782

Tax - 76,796 199,829 378,133 644,083 944,870 1,099,021 1,266,397 1,471,845 1,708,123
NET PROFIT/(LOSS) AFTER TAX 369,325 951,843 1,561,818 2,244,401 3,042,249 3,796,364 4,156,050 4,546,593 4,954,856 5,393,659

February 2015 14
12.2 Balance Sheet
Calculations SMEDA
Balance Sheet

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current assets
Cash & Bank 1,346,629 2,201,161 3,693,989 5,942,419 9,128,950 14,012,633 19,330,669 25,148,113 31,509,158 41,968,919
Finished goods inventory 208,983 243,368 282,593 327,230 377,969 435,583 479,137 527,050 579,755 637,731
Raw material inventory 432,756 558,576 718,156 920,126 1,175,254 1,423,097 1,721,948 2,083,557 2,521,104 -
Pre-paid building rent 247,500 272,250 299,475 329,423 362,365 398,601 438,461 482,307 530,538 -
Total Current Assets 2,235,867 3,275,355 4,994,214 7,519,198 11,044,538 16,269,914 21,970,215 28,241,027 35,140,556 42,606,650
Fixed assets
Machinery & equipment 1,164,960 1,035,520 906,080 776,640 647,200 517,760 388,320 258,880 129,440 -
Furniture, fixtures and Office Equipment 396,000 352,000 308,000 264,000 220,000 176,000 132,000 88,000 44,000 -
Office vehicles 774,900 688,800 602,700 516,600 430,500 344,400 258,300 172,200 86,100 -
Office equipment 113,200 84,900 56,600 28,300 227,887 182,310 136,732 91,155 45,577 -
Total Fixed Assets 2,449,060 2,161,220 1,873,380 1,585,540 1,525,587 1,220,470 915,352 610,235 305,117 -
Intangible assets
Pre-operation costs 162,000 144,000 126,000 108,000 90,000 72,000 54,000 36,000 18,000 -
Legal, licensing, & training costs 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 -
Total Intangible Assets 171,000 152,000 133,000 114,000 95,000 76,000 57,000 38,000 19,000 -
TOTAL ASSETS 4,855,927 5,588,575 7,000,594 9,218,738 12,665,125 17,566,384 22,942,567 28,889,262 35,464,673 42,606,650
Liabilities & Shareholders' Equity
Current liabilities
Accounts payable 505,227 604,993 712,477 836,068 978,073 1,138,099 1,259,211 1,392,916 1,541,626 1,581,821
Other liabilities
Total Current Liabilities 505,227 604,993 712,477 836,068 978,073 1,138,099 1,259,211 1,392,916 1,541,626 1,581,821
Other liabilities
Deferred tax - 76,796 276,625 654,758 1,298,841 2,243,711 3,342,732 4,609,128 6,080,973 7,789,096
Long term debt (Project Loan) 1,463,450 1,172,510 836,465 448,321 - - - - - -
Long term debt (Working Capital Loan) 527,238 422,421 301,353 161,517 - - - - - -
Total Long Term Liabilities 1,990,688 1,671,727 1,414,443 1,264,595 1,298,841 2,243,711 3,342,732 4,609,128 6,080,973 7,789,096
Shareholders' equity
Paid-up capital 1,990,688 1,990,688 1,990,688 1,990,688 2,218,575 2,218,575 2,218,575 2,218,575 2,218,575 2,218,575
Retained earnings 369,325 1,321,168 2,882,985 5,127,387 8,169,636 11,966,000 16,122,050 20,668,643 25,623,499 31,017,158
Total Equity 2,360,013 3,311,855 4,873,673 7,118,074 10,388,211 14,184,575 18,340,625 22,887,218 27,842,074 33,235,733
TOTAL CAPITAL AND LIABILITIES 4,855,927 5,588,575 7,000,594 9,218,738 12,665,125 17,566,384 22,942,567 28,889,262 35,464,673 42,606,650
12.3 Cash Flow Statement
Calculations SMEDA
Cash Flow Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net profit 369,325 951,843 1,561,818 2,244,401 3,042,249 3,796,364 4,156,050 4,546,593 4,954,856 5,393,659
Add: depreciation expense 287,840 287,840 287,840 287,840 287,840 305,117 305,117 305,117 305,117 305,117
amortization of pre-operating costs 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000
amortization of training costs 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Deferred income tax - 76,796 199,829 378,133 644,083 944,870 1,099,021 1,266,397 1,471,845 1,708,123
Finished goods inventory (208,983) (34,385) (39,226) (44,637) (50,738) (57,614) (43,554) (47,914) (52,705) (57,976)
Raw material inventory (103,281) (125,820) (159,580) (201,970) (255,127) (247,844) (298,850) (361,609) (437,547) 2,521,104
Pre-paid building rent (22,500) (24,750) (27,225) (29,948) (32,942) (36,236) (39,860) (43,846) (48,231) 530,538
Accounts payable 505,227 99,766 107,484 123,591 142,004 160,026 121,112 133,705 148,710 40,195
Cash provided by operations 846,629 1,250,289 1,949,941 2,776,411 3,796,368 4,883,683 5,318,036 5,817,444 6,361,046 10,459,761

Financing activities
Project Loan - principal repayment - (290,940) (336,045) (388,144) (448,321) - - - - -
Working Capital Loan - principal repayment - (104,817) (121,067) (139,837) (161,517) - - - - -
Issuance of shares - - - - 227,887 - - - - -
Purchase of (treasury) shares
Cash provided by / (used for) financing activities - (395,756) (457,113) (527,981) (381,950) - - - - -

Investing activities
Capital expenditure - - - - (227,887) - - - - -
Acquisitions
Cash (used for) / provided by investing activities - - - - (227,887) - - - - -

NET CASH 846,629 854,532 1,492,828 2,248,430 3,186,531 4,883,683 5,318,036 5,817,444 6,361,046 10,459,761
Pre-Feasibility Study Bakery and Confectionary

13 KEY ASSUMPTIONS

13.1 Operating Cost Assumptions

Description Details
Cost of goods sold growth rate 10%
Days operational per year – Factory 355
Days operational per year – Outlet 340
Operating costs growth rate 10%
Administration benefits expense 10% of administration expense
Travelling expense 0.5% of administration expense
Communication expense 2% of Sales
Office expenses (stationary, entertainment, janitorial
1% of administration expense
services, etc.)
Promotional expense 1% of revenue

13.2 Revenue Assumptions

Description Details
Sale price growth rate 10%
Production capacity utilization 70%
Production capacity utilization growth rate 5%
Maximum capacity utilization 95%
Days operational / year for Shop 340
Hours operational / day 16
Shift length (hours) 8

13.3 Financial Assumptions

Description Details
Debt 50%
Equity 50%
Interest Rate on Debt 15%
Debt Tenure 5 Years

February 2015 17
Pre-Feasibility Study Bakery and
Confectionary

13.4 Raw Material Assumptions

Plain & Dry Cakes
Plain cakes
Qty Qty Qty
Raw % Qty Ingredients in Ingredients Ingredients
Units Quantity Rate Cost
material ingredients Ingredients grams For For Making 1 For Making 1
Making 1 Kg Kg (gms) Pound (gms)
Butter Kg 350 300 104,966 21.73 303 225 225 102.058
Sugar Kg 62 55 3,421 3.86 333 40 40 18.144
Maida Kg 467 50 23,326 28.97 393 300 300 136.078
Baking
Kg 16 150 2,333 0.97 12 10 10 4.536
powder
Eggs Pcs 14,492 8 120,769 34.77 7,261 9 360 163.293
Flavour Ltr. 1 600 467 0.05 1 0.5 1 0.227
Cream+
Kg 156 400 62,202 9.66 100 100 45.359
Honey
317,483 100.00 8,302 1,036
Plain fruit cakes
Raw Cost % Qty Qty Ingredients in grams Qty Ingredients For
material Units Quantity Rate (Rs.) ingredients Ingredients For Making 1 Kg Making 1 Kg (gms)
Butter Kg 789 300 236,686 24.498 162 250 250
Sugar Kg 126 55 6,943 3.920 178 40 40
Maida Kg 789 50 39,448 24.498 211 250 250
Baking
Kg 32 150 4,734 0.980 6 10 10
powder
Fruit
Kg 947 170 160,946 29.397 66 300 300
Chuncks
Sougi Kg 158 50 7,890 4.900 66 50 50

February 2015 18
 Eggs Pcs 9,662 8.33 80,513 11.759 3,888 3 120
Flavour Ltr. 2 600 947 0.049 0.32 0.5 0.5
538,105 100 4,578 1020.5
Dry cakes
Raw Cost % Qty Qty Ingredients in grams Qty Ingredients For
Units Quantity Rate
material (Rs.) ingredients Ingredients For Making 1 Kg Making 1 Kg (gms)
Butter Kg 535 300 160,629 22.167 545 225 225
Sugar Kg 95 55 5,235 3.941 545 40 40
Maida Kg 654 50 32,721 27.094 545 275 275
Backing
Kg 24 150 3,570 0.985 22 10 10
powder
Eggs Pcs 21,738 8.33 181,153 35.468 16,364 9 360
Flavour Ltr. 12 600 7,139 0.493 1.09 5 5
Cream +
Kg 238 400 95,187 9.852 100 100
Honey
485,634 100.00 18,023 1015

Sweets & Nimko

Nimko
Raw Cost % Qty Qty Ingredients in Qty Ingredients For
Units Quantity Rate
material (Rs.) ingredients Ingredients grams For Making 1 Kg Making 1 Kg (gms)
Baison Kg 485 70 33,941 68.293 491 700 700
Dry Fruit Kg 139 150 20,780 19.512 123 200 200
Channe
Kg 69 120 8,312 9.756 61 100 100
y
Nimko
Kg 17 150 2,598 2.439 25 25 25
masala
65,632 100 700 1025
Sweets
Raw Cost % Qty Qty Ingredients in Qty Ingredients For
Units Quantity Rate
material (Rs.) ingredients Ingredients grams For Making 1 Kg Making 1 Kg (gms)
Khoya Kg 3,241 300 972,391 33.816 1,050 350 350
Maida Kg 2,084 50 104,185 21.739 263 225 225
Eggs Kg 38,340 8.33 319,500 15.459 131 4 160
Ghee Kg 1,389 190 263,935 14.493 53 150 150
Sugar
syrup or Kg 1,389 600 833,478 14.493 919 150 150
Sugar
2,493,489 100 2,415 1035

Chicken Bread
Raw Unit Cost % Qty Qty Ingredients in Qty Ingredients For
Quantity Rate
material s (Rs.) ingredients Ingredients grams For Making 1 Kg Making 1 Kg (gms)
Maida Kg 520.02 50 26,001 14.648 336.00 150 150
Oil Ltr 69.34 190 13,174 1.953 33.60 20 20
Yeast Kg 6.93 180 1,248 0.195 1.68 2 2
Sugar Kg 86.67 55 4,767 2.441 33.60 25 25
Salt Kg 6.93 8 55 0.195 3.60 2 2
Chicken Kg 1,213.38 220 266,943 34.180 480.00 350 350
Onion Kg 433.35 40 17,334 12.207 720.00 125 125
Masala Kg 173.34 60 10,400 4.883 84.00 50 50
Cheese Kg 346.68 500 173,340 9.766 180.00 100 100
Mayonna
ise & Kg 173.34 90 15,601 4.883 120.00 50 50
Ketchup
 Mix
Kg 520.02 80 41,602 14.648 120.00 150 150
Vegitable
3,550 570,465 100.00 2,112 1024 1024

Fresh Cream cakes

Raw Cost % Qty Qty Ingredients in grams Qty Ingredients For
material Units Quantity Rate (Rs.) ingredients Ingredients For Making 1 Kg Making 1 Kg (gms)
Butter Kg 806 300 241,774 12.207 545 80 125
Sugar Kg 645 55 35,460 9.766 545 100 100
Maida Kg 806 50 40,296 12.207 545 100 125
Backing
Kg 13 150 1,934 0.195 22 2 2
powder
Eggs Pcs 26,408 8.33 220,068 15.625 16,364 4 160
Flavour Ltr. 13 600 7,737 0.195 1.09 2 2
Fresh
Kg 3,288 300 986,437 49.805 510 510
Cream
1,533,705 100.00 18,023 1024

Pasteries & Puff etc

%
Raw Cost Qty Qty Ingredients in grams Qty Ingredients For
Units Quantity Rate ingredient
material (Rs.) Ingredients For Making 1 Kg Making 1 Kg (gms)
s
Butter Kg 373 300 112,042 12.207 545 100 125
Sugar Kg 299 55 16,433 9.766 545 100 100
Maida Kg 373 50 18,674 12.207 545 100 125
Backing
Kg 6 150 896 0.195 22 2 2
powder
Eggs Pcs 12,238 8.33 101,983 15.625 16,364 4 160
Flavour Ltr. 6 600 3,585 0.195 1.09 2 2
Fresh
Kg 1,524 300 457,129 49.805 510 510
Cream
710,742 100.00 18,023 1024

Chicken Pizza
Raw Unit Cost % Qty Qty Ingredients in Qty Ingredients For
Quantity Rate
material s (Rs.) ingredients Ingredients grams For Making 1 Kg Making 1 Kg (gms)
Maida Kg 1,361.41 50 68,070 19.417 336.00 200 200
Oil Ltr 102.11 190 19,400 1.456 33.60 15 15
Yeast Kg 6.81 180 1,225 0.097 1.68 1 1
Sugar Kg 136.14 55 7,488 1.942 33.60 20 20
Salt Kg 27.23 15 408 0.388 3.60 4 4
Chicken Kg 2,042.11 220 449,265 29.126 480.00 300 300
Onion Kg 1,361.41 40 54,456 19.417 720.00 200 200
Masala Kg 272.28 60 16,337 3.883 84.00 40 40
Cheese Kg 680.70 500 340,352 9.709 180.00 100 100
Mayonnai
se & Kg 340.35 90 30,632 4.854 120.00 50 50
Ketchup
Mix
Vegetable Kg 680.70 80 54,456 9.709 120.00 100 100
7,011 1,042,090 100 2,112 1030

Biscuits etc
Raw Cost % Qty Qty Ingredients in Qty Ingredients For
Units Quantity Rate
material (Rs.) ingredients Ingredients grams For Making 1 Kg Making 1 Kg (gms)
Butter Kg 2,095 300 628,525 16.393 303 170 170
 Sugar Kg Kg 1,84955101,673 14.465 333 150 150
Maida Kg 4,31350215,670 33.751 393 350 350
Baking powder Pcs Ltr. 621509,243 0.482 12 5 5
Eggs 115,0208.33958,500 34.716 7,261 9 360
Flavour 2560014,789 0.193 1 2 2
1,928,400 100 8,302 1037

Snacks
Per Piece Cost (Rs.)
Chicken Drum stick Leg Piece Chicken Leg Piece 35 149,100
Chicken Shami Chicken Sandiwitch Chicken Patties 63 268,380
Chicken Bread roll 17.5 93,188
35 124,250
19.6 173,950
35 124,250